THE MYTH

“FINANCIAL GLOBALIZATION HAS ONLY PROMOTED SPECULATION

AND RUIN”

TO BREAK THIS, HERE COMES

MYTH BREAKERS

Globalization? Global impact? Why?

Answer: Princess Diana's death. Question: How come? Question: What is the truest definition

of Globalization? Answer: An English princess, with an Egyptian lover, crashes in a French tunnel, driving a German car, with a Dutch engine, driven by a Belgian who was drunk, on Scottish whisky, followed closely by Italian

Photographers, on Japanese motorcycles;

CHECK THIS OUT

treated by an American doctor, using Brazilian medicines. This is being told by a British, using Bill Gates' technology, and you're seeing it through a Japanese

multimedia projector, that use Taiwanese chips, and a Korean lens, assembled by Bangladeshi workers, in a Singapore plant, This is being told in front of Professors, Educated in USA, UK, Japan, France, &

India That, my friends, is Globalization

BE READY TO WITNESS THE POWEROF --------------------

GL

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AL

IZA

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INDIAN ECONOMY HISTORY.

Comparative Growth Ratesof Developing Economies

Average Annual Rates 1960-88

CountryIndustrial

ProductionGDP

  1960-1980 1980-1988 1960-1980 1980-1988

South Korea 15.2 12.6 8.8 10.1

Taiwan 12.8 7.2 9.6 7.4

Singapore 12.1 4.5 9.2 6.9

Hong Kong 10.3 7.5 9.9 7.4

Thailand 10.3 6.6 7.4 6.5

Indonesia 8.9 5.1 5.9 5.7

Pakistan 8.0 7.2 4.4 6.3

Malaysia 9.6* 6.1 7.9* 4.6

India 4.6 7.6 3.5 5.4

Bangladesh 6.1 4.9 5.8* 3.5

Sri Lanka 5.3 4.4 5.2 3.9

Mayanmar 4.2 7.3* 3.5 3.3*

* - 1970-1980

Source: The Economist May 4, 1991, Survey page 7

The License Raj in Action

License Raj in application

Type Regulation License?

Consumer GoodsInessential

Banned  

Consumer GoodsEssential (Medicines)

Permitted  

Capital GoodsRestricted

PermittedCertification of Being Essential

Indigenous Angle ClearanceLicense

Capital GoodsOpen General License

Permitted No License Required

Intermediate GoodsBanned

Intermediate GoodsRestricted

License Required

Intermediate GoodsLimited Permissible

License Required

Intermediate GoodsOpen General License

No License Required

•excessive over-staffing •under utilization of capacity •excessive inventories •poor management of materials •obsolete technology •inadequate maintenance •wrong selection of products

In combination with the industrial-licensing regime [the small company policy] has given India the worst of both worlds: too many small and inefficient companies at the bottom, too many large and monopolistic ones at the top.

A poor country can’t afford to carry on billing the poorest people for its inefficiency and call itself socialist.

Nominal Tariff Rates of Various CountriesAs Percentage of Value, 1985

CountryIntermedi

ateGoods

CapitalGoods

ConsumerGoods

ManufacturingGoods

Hungary 14.2 15.0 22.6 20.9

Yugoslavia 18.0 20.7 20.0 19.0

Argentina 21.2 25.0 21.9 22.9

Morocco 21.6 18.1 43.0 27.3

Philippines 21.8 24.5 39.0 28.0

Mexico 25.5 23.5 32.2 24.7

Thailand 27.8 24.8 8.5 33.6

Turkey 29.4 54.9 55.3 37.1

Pakistan 75.0 73.8 127.3 89.8

China 78.9 62.5 130.7 91.2

Bangladesh 97.9 80.5 116.1 100.8

India 146.4 107.3 140.9 137.7Source: World Bank, cited in The Economist May 4, 1991, Survey page 9

INDIA RANKED 13TH IN GLOBAL LIST OF FDI

• WHILE THE WESTERN ECONOMIES STRUGGLED INDIA BENEFITTED FROM THEIR SHORTFALLS.

In past 27 years BSE Sensex has given about 18% returns

Past Performance (BSE Sensex)

Year Sensex Investment Rs.

1979 100 1,00,0000

2006 10,000 1,00,00,000

This is in spite of …

• Two wars• At least three major financial

scandals• Assassination of 2 prime

ministers

• At least 3 recessionary periods

• 10 different governments and• An unfair share of natural

disasters

Years YEAR END SENSEX level 1 year 3 years 5 years 7 years 10 years 15 years

0 31-Mar-79 100.00

1 31-Mar-80 128.57 28.57%

2 31-Mar-81 173.44 34.90%

3 31-Mar-82 217.71 25.52% 29.61%

4 31-Mar-83 211.51 -2.85% 18.05%

5 31-Mar-84 245.33 15.99% 12.25% 19.66%

6 31-Mar-85 353.86 44.24% 17.58% 22.44%

7 31-Mar-86 574.11 62.24% 39.49% 27.05% 28.36%

8 31-Mar-87 510.36 -11.10% 27.66% 18.58% 21.77%

9 31-Mar-88 398.37 -21.94% 4.03% 13.50% 12.61%

10 31-Mar-89 713.60 79.13% 7.52% 23.81% 18.48% 21.72%

11 31-Mar-90 781.05 9.45% 15.24% 17.16% 20.52% 19.77%

12 31-Mar-91 1167.97 49.54% 43.12% 15.26% 24.97% 21.01%

13 31-Mar-92 4285.00 266.88% 81.76% 53.04% 42.80% 34.71%

14 31-Mar-93 2280.52 -46.78% 42.93% 41.76% 21.78% 26.84%

15 31-Mar-94 3778.99 65.71% 47.90% 39.57% 33.11% 31.45% 27.40%

16 31-Mar-95 3260.96 -13.71% -8.70% 33.09% 35.03% 24.87% 24.05%

17 31-Mar-96 3366.61 3.24% 13.86% 23.58% 24.81% 19.35% 21.86%

18 31-Mar-97 3360.89 -0.17% -3.83% -4.74% 23.18% 20.74% 20.02%

19 31-Mar-98 3892.75 15.82% 6.08% 11.29% 18.77% 25.60% 21.43%

20 31-Mar-99 3739.96 -3.92% 3.57% -0.21% -1.92% 18.02% 19.92%

21 31-Mar-00 5001.28 33.73% 14.17% 8.93% 11.87% 20.40% 19.31%

22 31-Mar-01 3604.38 -27.93% -2.53% 1.37% -0.67% 11.93% 13.03%

22 31-Mar-02 3469.35 -3.75% -2.47% 0.64% 0.89% -2.09% 13.63%

22 31-Mar-03 3048.72 -12.12% -15.21% -4.77% -1.41% 2.95% 14.53%

23 31-Mar-04 5590.60 83.38% 15.76% 8.37% 7.54% 3.99% 14.71%

24 31-Mar-05 6492.82 16.14% 23.23% 5.36% 7.58% 7.13% 15.16%

25 31-Mar-06 11279.96 73.73% 54.67% 25.63% 17.08% 12.85% 16.32%

28.29% 19.43% 17.41% 17.48% 17.85% 18.57%

10/27 5/25 3/23 3/21 1/18 0/13Probability of Loss

PERFORMANCE OF BSE SENSITIVITY INDEX - Equities not risky in long run

Rolling Returns - Growth

Average Returns

18.57%

0 / 13

Equities:Not Risky in Long Run

Example Period Sensex Growth Sensex Earning

31 Mar 1991 1167.97 59.53

31 Mar 2006 11279.96 539.20

% growth (CAGR) 16.32% 15.82%

Period Sensex Growth Sensex Earning

31 Mar 2000 5001.28 231.54

31 Mar 2006 11279.96 539.20

% growth (CAGR) 14.52% 15.13%

ADVANTAGES OF FDI

• IMPROVED CAPITAL FLOW.• INCREASED CAPITAL FLOW.• MANAGEMENT EXPERTISE.• ACCESS TO INTERNATIONAL

MARKETS.

FDI IN MAJOR SECTORS IN INDIA

• FINANCIAL SECTOR.• INSURANCE AND

TELECOMMUNICATION.• HOSPITALITY AND TOURISM.• PHARMASEUTICALS.• SOFTWARE AND I.T.

MODES Of FDI• BY TARGET.• BY MOTIVES.• BY DIRECTION.

INDIA RANKS HIGH IN FII PRIORITY LIST

• INDIAN ECONOMY IS LESS EXPORT-ORIENTED AND THIS PLACES IT IN A STRONGER POSITION THAN CHINA

Why to invest in india ????

• 2ND LARGEST EMERGING MARKET.• LABOUR FORCE.• RETURN ON INVESTMENTS.• SECOND LARGEST GROUP OF SOFTWARE DEVELOPERS AFTER U.S.• BOMBAY STOCK EXCHANGE.• ECONOMY.